LBS Blockchain Society Delegate Platform

Add LUSD to Arbitrum Aave V3

Vote Result: YES

Rationale

Even though we voted in favour of the previous AIP implementing this proposal, the AIP did not pass due to low participation. Therefore, we will vote YES again in favour this time around.

Add ENS to Aave V3 Ethereum

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.

Add 1INCH to Aave V3 Ethereum

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.

[ARFC] Add Native USDC to the Arbitrum V3 Pool

Vote Result: YES

Rationale

The native USDC is anticipated to become the primary version of the USDC stablecoin on the Arbitrum L2 and will supersede the current “USDC.e” token, so from a long-term perspective, Aave should replace the bridged assets with the native one. Moreover, Gauntlet and Chaos are also in support of this proposal from a risk angle. Therefore, we will vote YES in favour of this proposal.

[TEMP CHECK] Add GMX to Arbitrum v3

Vote Result: YES

Rationale

Given the more conservative risk strategy being proposed for GMX, we believe this proposal should pass as it would be beneficial to the Aave ecosystem. Therefore, we will vote YES in favour of this proposal.

1 Like

[ARFC] Add FRAX Arbitrum Aave v3

Vote Result: YES

Rationale

Given the increased profitability and user base for Aave, the prior history of the lending AMO on Ethereum v2, the low volatility of FRAX and high security of the protocol, and the fact that the proposal has been approved by both Chaos and Gauntlet and imposes relatively conservative risk parameters, we will vote YES in favour of this proposal.

Risk Parameter Updates Aave V3 Ethereum

Vote Result: YES

Rationale

Given that these parameter recommendations improve capital efficiency of the protocol and increase revenues without significant offsetting increase in liquidation risk, and there is no objection from other risk modelling / ecosystem providers, we will vote YES in favour of this proposal.

Risk Parameter Updates for AAVE V2 Ethereum

Vote Result: NO

Rationale

As gleaned from the forum post, the reasons not to freeze are stronger than the reasons to freeze. Firstly, freezing the asset might prevent more borrows, but also would prevent refillings. Any additional exposure from potential refills will not be very negative to Aave, given the assumption that the user will not have too much CRV to refill to begin with. Freezing will stop them from protecting their position further. Moreover, Chaos Labs’ simulations show bad debt amounting to tens of millions already and freezing would just be a token gesture that would not stop the negative effects from the overexposure to CRV that already exists. In a freeze, furthermore, as Chaos has mentioned, immobilising large CRV positions could lead to high market turbulence and cause a speculative attack on the CRV token. A freeze is a severe measure which should be enacted in scenarios where its impact is high - in this case, freezing CRV would be antithetical to the principles of DeFi since, one, the user is a long-term one who has been adding collateral to their position and repaying the loan in USDT, and there is nothing to indicate any malicious attack against Aave, and two, the protocol to prevent ‘potential bad action’ from a long-time user is questionable, especially when the Health Factor is still not dangerous. Aave is being used as intended and this would set a dangerous precedent for the future - the user has done nothing wrong.

While we do acknowledge the need to make risk parameter changes to deal with the existing overexposure to CRV and to generally migrate away from v2, freezing would not stop Aave from being exposed to bad debt and losing millions - it may make a bad situation worse. Therefore, we will vote NO for this proposal and await the risk providers’ recommendations on de-risking Aave v2.

1 Like

[TEMP CHECK] Aave | Flipside Proposal

Vote Result: YES

Rationale

Flipside have been great to work with and their effort on Aave should not be underestimated. The data warehouse point is well noted and we encourage competition amongst treasury managers on Aave. Flipside have very clearly outlined what they would do with the funds and a 6-month period is good enough to judge them on and decide on whether to renew. While some of the functions do overlap with ACI (e.g., in terms of helping with governance), this is something that Flipside has been doing for free in any case and is a small component of their overall scope. Moreso, the alignment on DAO strategy and vision is sorely needed, as is experimentation around the way the DAO operates.

A negative is that Aave DAO needs to improve how it allocates and spends its resources - the post by @Michigan_Blockchain clearly highlights how the DAO’s expenses have ballooned and spending more on service providers where some aspects overlap may not be the best move. However, other providers’ contracts are up for renewal and we need to be more critical of the higher value contracts. Since here the cost is low compared to the other service providers serving the DAO, it isn’t as much of a problem and needs to be judged in comparison with what others are being paid.

Therefore, we will vote YES in favour of this proposal.

Price feeds operational update Pt2 - stETH

Vote Result: YES

Rationale

This update creates more consistency in pricing methods of LSTs on Aave, which will allow the growth of strategic assets for the Aave DAO while maintaining the highest safety standards. The updates made here smooth out technicalities in pricing mechanics and optimises the protocol. Therefore, we will vote YES in favour of this AIP.

Treasury Management - Acquire B-80BAL-20WETH

Vote Result: YES

Rationale

This is the on-chain implementation for this Snapshot vote that we voted in favour of according to our rationale here. Given that the methodology and payload have been tested with Yearn, CoW Swap, and BGD, and given CoW Swap’s record of being used before for big DAO trades to protect against MEV, slippage, and to find liquidity for trades, we will vote YES in favour of this proposal.

However, there are no other options presented as to how this trade could be executed, and it would be better to lay out other options in order for the DAO to make a more informed decision.

[TEMP CHECK] GHO Liquidity Pools

Vote Result: YES

Rationale

Given Aave’s relationship with Balancer and the importance of veBAL to bootstrap GHO liquidity, the initial primary liquidity pools chosen are logical. Having a USD and LST liquidity pool is critical, while having the primary pools on Balancer will be better for Aave since BAL incentives will exceed the trading fee revenue generated on other DEXs. Further, having LUSD as the third pool is a good move due to its decentralised nature. Lastly, Aave DAO, Aave Companies, Balancer, Aura Finance, QiDAO and Lido DAO will all provide veBAL support. There is an estimate that between 4-5% of all veBAL support will be pointed at GHO pools. The yield from BAL and AURA incentives will give GHO some utility at launch.

One concern is that CRV is where there is most liquidity for stablecoins and it brings to question whether it is a smart move to have all the primary pools on Balancer. However, at the moment, Aave bootstrapping a Uniswap or Curve pool would require a budget from Aave DAO. Both of these options would require incentivising liquidity which would be expensive for Aave. Therefore, the above points in favour of the Balancer pools outweigh this concern, and therefore we will vote YES in favour of this proposal.

1 Like

Polygon v2 - Parameter Update

Vote Result: YES

Rationale

This is the on-chain implementation for this Snapshot vote that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.

[ARFC] - Chaos Labs Risk Parameter Updates - CRV Aave V2 Ethereum - 2023.06.15

Vote Result: YES

Rationale

The suggested risk parameter adjustments are necessary given the large CRV position on Aave in an illiquid market. Moreover, the proposed risk management plan will operate in incremental changes over time, which helps to minimise user impact. Therefore, we will vote YES in favour of this proposal.

Add Native USDC To Arbitrum V3 Pool

Vote Result: YES

Rationale

This is the on-chain implementation for this Snapshot vote that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.

[ARFC] Gauntlet Recommendation on TUSD for Aave v2 Ethereum

Vote Result: Lower LT

Rationale

Given the current FUD in the market surrounding TUSD, as well as the seen behaviour of borrowing on Aave v2 Ethereum, it makes sense to cap the parameters of TUSD up till such a time the market stabilises. Freezing it is potentially too aggressive of a scenario given there hasn’t been any proven data on the asset actually depegging. Therefore, we will vote YES in favour of reducing the LTV and LT of TUSD.

Chaos Labs V2 to V3 Migration Next Steps

Vote Result: YES

Rationale

There is a clear need to incentivise moving away from v2 and onto v3, with its better risk management features. It has been long enough for users to migrate liquidity already and freezing the existing markets would quickly incentivise a move to v3. This would also help Aave avoid situations like the CRV one and does not limit users from participating in the protocol as they can do so via v3. Other options could be to reduce LTs or IR curves significantly, but these would hurt existing users while freezing would not. Therefore, we will vote YES in favour of this proposal.

[ARFC] Bug Bounties Proposal

Vote Result: YES

Rationale

This is a non-controversial proposal which seeks to reward researchers for finding vulnerabilities in Aave’s code. The scenarios have been well-explained in the proposal and seem logical. Therefore, we will vote YES in favour of this proposal.

Chaos Labs Risk Parameter Updates - CRV Aave V2 Ethereum

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal that we voted YES in favour of according to our rationale here. Therefore, we will vote YES in favour of this AIP as well.

[ARFC] USDT Risk Parameters Update Aave V3 ETH Pool

Vote Result: YES

Rationale

USDT has been resilient over the years and has maintained its peg, and adding it as collateral will help increase revenue for Aave. A point to note is that there are still concerns over centralisation and counterparty risk from enabling USDT to be used as collateral. However, voting against adding USDT due to centralisation risks would also throw a spotlight on USDC and DAI since those assets have centralisation risks too. Given that USDT has proven itself as a large stablecoin, we will vote YES in favour of adding it as collateral.

Note: Our Snapshot vote did not go through due to technical issues.